Tag: HSA

Opposition to ObamaCare Hits New High in Kaiser Family Foundation Poll

The following chart shows that ObamaCare’s unfavorables reached 50 percent in the latest Kaiser Family Foundation poll.  That’s higher than at any point since KFF started tracking ObamaCare’s unfavorables in January 2010.  The KFF poll also found that opposition is much more intense than support; 19 percent view the law very favorably, while 34 percent view the law very unfavorably.  Despite the availability of the these nuggets, KFF’S press release chose to deemphasize the surge: “Americans Remain Divided Over Health Reform With An Uptick In Public Opposition As GOP Ramped Up Repeal Campaign.”

Even more entertaining was this chart, which purports to show that Americans oppose defunding ObamaCare by nearly 2-to-1.

Dig a little deeper, though, and you’ll find that 16 percent of the public opposes defunding ObamaCare because they want to see the law flat-out repealed.  A less-misleading pie chart would show that 33 percent approve of defunding, 16 percent say “don’t defund, just repeal” (total: 49 percent), and 46 percent disapprove of defunding ObamaCare.

Other findings include:

  • 76 percent of the public oppose the individual mandate (and 55 percent oppose it even after hearing arguments for and against);
  • 69 percent support cutting spending on ObamaCare’s coverage expansions;
  • 60 percent believe ObamaCare will increase the deficit, while only 11 percent believe it will reduce the deficit;
  • 52 percent support cutting Medicaid;
  • 51 percent oppose ObamaCare’s employer mandate; and
  • 51 percent oppose ObamaCare’s new taxes on over-the-counter medications for HSA, FSA, and HRA holders.

Despite these generally sensible views, 68 percent believe that Congress can balance the budget without cutting Medicare.

ObamaCare’s Price Controls Threaten HSAs

John Goodman is correct that ObamaCare’s individual mandate – and Kathleen Sebelius’s power to make the mandate more burdensome at whim – threaten the continued existence of health savings accounts (HSAs).  But ObamaCare’s price controls are no less a threat.

The new law requires insurers to charge enrollees of the same age the same average premium, regardless of health status.  That’s a price control, and it will cause premiums for healthy people to rise dramatically and thus lead to massive adverse selection.  Healthy people will gravitate to less-comprehensive insurance – in particular, HSA-compatible high-deductible plans – where the implicit tax is smaller.

As premiums for comprehensive plans spiral upward (ultimately causing comprehensive plans to disappear) and as ObamaCare proves more costly than projected, supporters will be desperate for new revenue.  They will call for the elimination of both HSAs and high-deductible health plans on the grounds that those products – not the price controls, mind you – are causing the market to unravel.

HSAs allow young and healthy consumers to avoid the raw deal that ObamaCare offers them. And that’s precisely why ObamaCare’s supporters will try to kill HSAs. We will end up repealing one or the other.

Obama’s HSA Gambit a Net Minus?

President Obama evidently thinks that if he promises not to kill health savings accounts (HSAs), opponents will swoon for his government takeover of health care.  If that doesn’t do the trick, he should make clear that his health plan would not eliminate other things too, like the Defense Department and puppies.

Of course, that hollow gesture didn’t win the president any Republican support.  But it may have cost him some Democratic support – or at least frayed the nerves of a few House Democrats.  According to CongressDaily:

Liberals, meanwhile, are fuming over an addition Obama made to his proposal to make the effort appear bipartisan and possibly switch the votes of moderate Democrats who opposed the House bill last year.

The Congressional Progressive Caucus co-chairman, Rep. Raul Grijalva, D-Ariz., said Wednesday he is disturbed and bitter about an addition he said goes against Democratic principles.

“I’ve been leaning ‘no’ for a long time. That hasn’t changed,” Grijalva said about voting for the healthcare overhaul the Senate passed in December and a package of changes that would move through a separate bill through reconciliation.

Obama indicated he might be open to a provision that would encourage the use of health savings accounts, a tax-exempt savings account that typically is used in conjunction with a high-deductible plan. The provision would allow the exchanges to offer high-deductible plans.

“For some of us, the bitterness about HSAs in and the public option completely out, I don’t know how long that’s going to linger,” Grijalva said.

Which tends to confirm what HSA supporters have long feared: killing HSAs is the Left’s game plan.

Mr. President, Here Is Our Answer

President Obama continues to portray the debate over health care reform as a choice between his plan for a massive government-takeover of the US healthcare system and “doing nothing.”  Those who oppose his plan are said to be “obstructionist” or in favor of the status-quo.  Yesterday, the President again said, “I’ve got a question for all those folks [who oppose his plan]: What are you going to do? What’s your answer? What’s your solution?”

Well, I can’t speak for all his critics, but the Cato Institute has a long record of supporting health care reform based on free-markets and competition.  If the President wanted to know more he might have read my recent op-ed in the Los Angeles Times or Michael Cannon’s piece in Investors Business Daily.  He could have read our book, Healthy Competition.  Or he might have just gone to healthcare.cato.org and read our plan:

  • Let individuals control their health care dollars, and free them to choose from a wide variety of health plans and providers.
  • Move away from a health care system dominated by employer-provided health insurance. Health insurance should be personal and portable, controlled by individuals themselves rather than government or an employer. Employment-based insurance hides much of the true cost of health care to consumers, thereby encouraging over-consumption. It also limits consumer choice, since employers get final say over what type of insurance a worker will receive. It means people who don’t receive insurance through work are put at a significant and costly disadvantage. And, of course, it means that if you lose your job, you are likely to end up uninsured as well.
  • Changing from employer to individual insurance requires changing the tax treatment of health insurance. The current system excludes the value of employer-provided insurance from a worker’s taxable income. However, a worker purchasing health insurance on their own must do so with after-tax dollars. This provides a significant tilt towards employer-provided insurance, which should be reversed. Workers should receive a standard deduction, a tax credit, or, better still, large Health Savings Accounts (HSAs)  for the purchase of health insurance, regardless of whether they receive it through their job or purchase it on their own.
  • We need to increase competition among both insurers and health providers. People should be allowed to purchase health insurance across state lines. One study estimated that that adjustment alone could cover 17 million uninsured Americans without costing taxpayers a dime.
  • We also need to rethink medical licensing laws to encourage greater competition among providers. Nurse practitioners, physician assistants, midwives, and other non-physician practitioners should have far greater ability to treat patients. Doctors and other health professionals should be able to take their licenses from state to state.   We should also be encouraging innovations in delivery such as medical clinics in retail outlets.
  • Congress should give Medicare enrollees a voucher, let them choose any health plan on the market, and let them keep the savings if they choose an economical plan. Medicare could even give larger vouchers to the poor and sick to ensure they could afford coverage.
  • The expansion of “health status insurance” would protect many of those with preexisting conditions. States may also wish to experiment with high risk pools to ensure coverage for those with high cost medical conditions.

Mr. President, the ball is back in your court.

Nader Supports Health Savings Accounts?

In a recent article Ralph Nader attacks several critics of Obama’s health care reform proposal, including Cato:

Now enters the well-insured libertarian Cato Institute with full-page ads in the Washington Post and The New York Times charging Obama with pursuing government-run health care. A picture of Uncle Sam pointing under the headline “Your New Doctor.” Nonsense. The well-insured people at Cato should know better than to declare that this “government takeover” would “reduce health care quality.”

I agree that Cato employees are “well-insured” – a description so appropriate that Nader used it twice in a single paragraph. At Cato we have Health Savings Accounts, which are probably the closest thing to free market health insurance allowed by law.

It’s nice to see Nader, a proponent of socialized medicine, praise HSAs. But it’s unfortunate that his preferred options for health care would abolish HSAs entirely.

The Attempted Murder of HSAs

There may be nothing that more scares advocates of government-controlled health care than giving patients control over their medical treatment.  Thus, it should come as no surprise that the current versions of health care “reform” would kill off Health Savings Accounts (HSAs).

Explains John Fund in the Wall Street Journal:

Eight million Americans, according to the Treasury Department, are covered by plans with low-cost premiums and high deductibles that are designed for large, unexpected medical costs. Money is also set aside in a savings account to cover the deductibles, and whatever isn’t spent in one year can build up tax-free. Nearly a third of new HSA users, according to Treasury figures, previously had no insurance or bought coverage on their own.

These policies will be severely limited. The Senate plan says a policy deemed “acceptable” must have insurance (rather than the individual) pay out at least 76% of the benefits. The House plan is pegged at 70%. That’s not the way these plans are set up to work. Roy Ramthun, who implemented the HSA regulations at the Treasury Department in 2003, says the regulations are crippling. “Companies tell me they could be forced to take products off the market,” he said in an interview.

This level of micro-management is a good argument in principle against the sort of “reform” currently being promoted on Capitol Hill.  But the proposed rules likely were drafted in order to eliminate HSAs as an option.  Explains Ryan Ellis of American Shareholders:

If an insurance plan must pay for 70 or 76 percent of all health care costs, it would be next to impossible for it to qualify as a high-deductible health plan.  No HDHP, no HSA contribution.

The only hope a plan would have would be to do the following:

  • Have a deductible no higher than the HDHP minimum ($1150 single, $2300 family in 2009)
  • The out of pocket limit would have to be an identical amount
  • The plan would have to cover all allowable preventive care on a first-dollar basis (annual physical, prenatal and well-child, immunizations, smoking cessation, weight loss programs, and early screening services)

Any HDHP which is this generous would have very little premium savings relative to a tradtional health insurance plan.  If the typical HDHP today shaves about 33 percent off your premium, a plan like this might only shave off about 10 percent.  There would be very little incentive to get an HSA-qualified insurance plan.

HSAs are an imperfect vehicle, an attempt to deal with the perverse incentives created by Washington’s favorable tax treatment of employer-provided health care.  But the limitations inherent to HSAs should impel us to expand, not eliminate vehicles to enhance consumer choice.  The more we find out about health care “reform,” the more obvious it is that patients would be the biggest losers.